(ARA) – While you’re running through all the financial tasks small businesses do to close out one fiscal year and start the next, don’t forget to examine an often-overlooked key financial factor – your business credit.
Between closing your books on 2010 and preparing for 2011’s tax season, knowing how creditors and others perceive your business may not be top of mind. Yet, now is the perfect time to verify the information in your business credit report and update it with current and relevant facts about your growing business. It can help you better prepare your business for the coming year. The credit experts at Experian offer some insight into the factors that affect your small business credit report and business credit score, and why it’s important to your business.
Why it matters
Does your business credit report really matter? Absolutely. It paints a picture of your small business for the world to see. Outdated or incorrect information can give the wrong impression about your business, resulting in unfavorable decisions by potential lenders and creditors – which can negatively impact your bottom line. Plus, anyone, including partners and investors, can view your business credit report for any reason.
If your business has grown or changed over the last year, it’s important to update the data reflected in your report and know the score. There are several factors that make up a business credit score, including but not limited to previous payment history, industry type and business size.
An accurate business credit report and a good business credit score can:
* Save you money because lenders usually offer their best interest rates to businesses with good credit.
* Reduce your personal liability and protect your personal assets by enabling you to obtain business credit without the need for a personal guarantee.
* Help you offer your customers competitive prices by passing your interest savings on to them, while still keeping a larger margin of profit for yourself.
* Get you the money and capital you need to keep your business running.
What’s on your report?
Your business credit report provides an up-to-date, objective overview of your business and how it manages financial obligations. It can include information on your payment history, public records about your business, background on the company, collections information and comparative information that places your business payment history in context with your industry.
You can find out how your business compares to others like it across the nation in terms of business credit with an interactive map by visiting www.businesscreditfacts.com/map.
Managing and monitoring
Web-based services are a great way to monitor and manage your business credit report. Sites like SmartBusinessReports.com and Experian.com/SmallBusinessCredit not only allow you to view your own business credit report and score, but also provide useful information on how Experian arrives at your credit score and how your business practices affect your score and report. These sites also allow you to check the business credit of your suppliers, customers, prospects, partners and competitors.
Your business credit information is as important to your business’ financial health as your personal credit information is to your ability to borrow money privately. While you’re wrapping up last year’s financial matters and preparing for the coming year, now is a good time to think about your business credit and how you’ll manage it throughout the new year.